NY removed from state AGs committee on mortgages

Tue Aug 23, 2011 8:00pm EDT

* Schneiderman removed from committee

* Iowa says New York has "undermined" gov't coalition

By Andrew Longstreth

NEW YORK, Aug 23 (Reuters) - New York Attorney General Eric Schneiderman was removed on Tuesday from a committee of state attorneys general probing mortgage abuses, Iowa's attorney general said.

Schneiderman's removal follows his statements in recent months voicing concerns over a proposed deal between major banks and a coalition of federal and state officials over claims of foreclosure abuses.

"Effective immediately, the New York Attorney General's Office has been removed from the Executive Committee of the Robosigning multistate," an attorney in the Iowa Attorney General's office, which is leading the investigation, said in an email on Tuesday to other lawyers involved in the probe.

The removal is the latest sign of discord between Schneiderman and the state and federal coalition on mortgage abuses. On Monday, the New York Times reported that the federal government was pressuring him to agree to a settlement with the banks over abuses such as submitting allegedly false documents to remove borrowers from their homes.

Schneiderman has said that he opposes any deal that gives participating banks a release from other litigation surrounding their mortgage activities. Attorneys general from other states have also questioned aspects of the deal, including Delaware Attorney General Beau Biden.

In a statement, Iowa Attorney General Tom Miller said that New York had been a member of the executive committee since it was formed in October 2010. But he said that New York declined an opportunity to be part of a smaller negotiation committee formed in June 2010.

"Since that time, New York has actively worked to undermine the very multistate group that it had spent the previous nine months working very closely with," he said.

Miller added that allowing New York to remain on the committee "simply doesn't make sense, is unprecedented and is unacceptable."

Danny Kanner, a spokesperson for Schneiderman, said the attorney general is "committed to a comprehensive resolution that will provide homeowners meaningful relief to stay in their homes, allow the housing market to begin to recover, and get our economy moving again."

Kanner also said that "investigations by attorneys general cannot be shut down by efforts to settle quickly and those responsible must be held accountable."

Separately, Schneiderman has been pursuing his own investigation into another aspect of the mortgage business, the securitization practices at large banks. He recently sought to intervene in Bank of America Corp's (BAC.N) $8.5 billion mortgage-backed securities settlement, which he called "unfair" and "inadequate." (Reporting by Andrew Longstreth; editing by Carol Bishopric)

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